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PNC is joining the growing list of banks doing away with free checking, announcing yesterday
that it plans to eliminate its free accounts over the next year.

The bank’s decision to make such a move is hardly new in the industry. Banks began to impose
fees a few years ago as regulatory changes took a toll on bank revenue.

“This is consistent with the trend in the market,” said Greg McBride, senior financial analyst
with Bankrate.com. “Free checking can still be obtained, but it often requires direct deposit, or a
combination of other accounts and balances, rather than being passed out to everyone that walks
through the door.”

Bankrate.com said 39 percent of banks offer a checking account that is free with no conditions,
down from 76 percent in 2009.

Columbus-based Huntington Bancshares, for example, has opted to keep checking accounts fee-free
with no conditions, a move that the bank has credited as being a major driver in customer
growth.

As part of PNC’s move to eliminate fee-free accounts, customers will be offered two new
accounts. One, called standard checking, requires customers to maintain a $500 balance, have direct
deposits totaling at least $500 a month, or be 62 or older to avoid a monthly fee.

Otherwise, the account will cost $7 per month, plus $2 for paper statements.

Customers also could opt for accounts that require higher balances or loans or investment
accounts, but also offer additional features — such as reimbursement of ATM fees for not using a
PNC ATM — or provide greater rewards. Such accounts carry fees of $15 to $25 a month if the
requirements aren’t met.

PNC spokesman Pat McMahon said of the $7 fee: “We think that’s a reasonable amount, given the
technology and processing and everything else that’s behind the scene for someone’s bank
account."

The bank will stop opening free checking accounts as of Aug. 18.

PNC is one of the biggest banks in central Ohio in market share. Federal Deposit Insurance Corp.
data shows that PNC’s 12.1 percent of the market in terms of deposits trails only Huntington and
JPMorgan Chase & Co.

Studies have pegged a bank’s cost of maintaining a checking account at around $300 a year.

The elimination of the free checking account is part of a long-term strategy by PNC to keep the
bank strong while investing in services that customers want, the bank said.

“We’re working hard to accelerate the pace of change within our retail-banking business in order
to deliver the services our customers want at a cost our shareholders can accept,” CEO Bill Demchak
told analysts on March 5.

The accounts are meant to deepen the bank’s relationships with its customers, the bank said.

“For customers who make us their primary bank with more deposits and other services, such as a
loan or credit card, the results are greater rewards for them and increased business for the bank,”
McMahon said.

PNC opted to keep a free checking account in 2011 while it talked with customers about what they
wanted, he said.

About 90 percent already have opted for one of the accounts that require a minimum balance,
direct deposit or some other qualification to keep the account free, as opposed to going with the
outright free account, McMahon said.

“The free-checking offers we have in those relationship accounts clearly were good ones for
customers,” he said.

The bank also has an account meant for people entering or re-establishing themselves in the
banking system. Come December, the fee for those accounts will increase from $5 to $7 per month,
and paper statements will cost an extra $2.